Would be curious to hear your take on this op-ed. It seems we have an uphill battle in expanding mortgage credit access. It seems completely upside down to me. If we’re going to subsidize mortgage credit access, why not target the most needy? As it stands, the mortgage market seems like just another example of regressive subsidies in this country.
My God. If you believe the opposite of every sentence in that dreck you'll be a good way toward having a decent understanding of mortgages and housing.
Question for you. You talk about lowering rents but your own chart shows that people tend to spend a fixed amount of their income on them (a pattern that is discernable in many countries post 1980). So would addressing the supply-demand imbalance actually lower rents? Furthermore, the downward trend of the red line suggests that spacial equilibrium (ie people increasingly trying to live in expensive cities where economic acrivity has concentrated) is a big factor in explaining what is going on. But building in these city centers is much harder. So would building in places without agglomeration economics really fix the issue?
I was going to ask the reductio ad absurdum: Would it be ok if we were still spending 15% of disposable income on housing, but we were all living in tents? Then I realized that, increasingly, that is what Americans are doing to keep rent/income steady. It's not a reductio ad absurdum.
Also, I think scarcity and inertia explain most of the rent inflation, and agglomeration economics is wildly overstated as a cause of our rising housing costs. In New York City, the market rent on any given unit is mostly determined by the rent the next marginal family that will be regionally displaced is willing to pay to resist displacement. Every city that lowers new housing production to the rate that New York City has sees the same type of rent inflation. And, unfortunately, because of policy choices in 2008, practically every city has served as an example.
I think Kevin is focused on lowering the market rent for a unit of a given quality, not lowering the fraction of income going towards rent. The latter is always going to be a personal choice. The former is a consequence of our degrowth policies, including blockading construction and closing off access to mortgages, and its result is mass deprivation of housing and mass exclusion of ordinary workers from our most productive regions.
Would be curious to hear your take on this op-ed. It seems we have an uphill battle in expanding mortgage credit access. It seems completely upside down to me. If we’re going to subsidize mortgage credit access, why not target the most needy? As it stands, the mortgage market seems like just another example of regressive subsidies in this country.
https://www.wsj.com/opinion/the-case-against-30-year-mortgages-0cbd6d56?st=CJQS67&reflink=desktopwebshare_permalink
My God. If you believe the opposite of every sentence in that dreck you'll be a good way toward having a decent understanding of mortgages and housing.
The homeownership rate went from 41% in 1940 to 65% in 1980, where it remains today. Home prices were flat when that happened.
The author of the wsj piece just followed me on Twitter. (:-0)
Question for you. You talk about lowering rents but your own chart shows that people tend to spend a fixed amount of their income on them (a pattern that is discernable in many countries post 1980). So would addressing the supply-demand imbalance actually lower rents? Furthermore, the downward trend of the red line suggests that spacial equilibrium (ie people increasingly trying to live in expensive cities where economic acrivity has concentrated) is a big factor in explaining what is going on. But building in these city centers is much harder. So would building in places without agglomeration economics really fix the issue?
I was going to ask the reductio ad absurdum: Would it be ok if we were still spending 15% of disposable income on housing, but we were all living in tents? Then I realized that, increasingly, that is what Americans are doing to keep rent/income steady. It's not a reductio ad absurdum.
Also, I think scarcity and inertia explain most of the rent inflation, and agglomeration economics is wildly overstated as a cause of our rising housing costs. In New York City, the market rent on any given unit is mostly determined by the rent the next marginal family that will be regionally displaced is willing to pay to resist displacement. Every city that lowers new housing production to the rate that New York City has sees the same type of rent inflation. And, unfortunately, because of policy choices in 2008, practically every city has served as an example.
I think Kevin is focused on lowering the market rent for a unit of a given quality, not lowering the fraction of income going towards rent. The latter is always going to be a personal choice. The former is a consequence of our degrowth policies, including blockading construction and closing off access to mortgages, and its result is mass deprivation of housing and mass exclusion of ordinary workers from our most productive regions.
Rent doesn’t affect me. I don’t intend ever to sell. I’m just relieved to never have to pay another rent or mortgage payment.